In this highly competitive arena, innovation is rife. From introducing new technology and broadening the product portfolio to positioning the brand and deepening customer relationships, there are several key drivers gaining widespread attention. Today’s two main technological sources of innovation are the on-line provisions market and an improved supply chain-focused technology such as smart tags. Both are addressing improved efficiency of goods supply and provision, but are also areas of consumer-focused innovation around convenience and traceability. In terms of broadening the product mix, the migration of food to general product supply has been followed by service development using the retailer brand as the focal point. Starting with a limited range of joint venture financial products, this has spread to loans, insurance, holidays, car retail and, most recently, energy supply, virtual mobile phone operations and real estate. All are usually delivered in partnership with leading existing suppliers, but are positioned around the increasing levels of trust that consumers have with their favorite retail brand.

Many retailers are using the migration of their loyalty cards into their joint venture services and relationships such as Nectar in the UK to gain new information about their wider customer base that feeds into detailed segmentation analysis and opportunities for cross selling. Retailers can now find out what their customers spend their money on outside the store and can use this to develop new branded service propositions and improve the levels of cross-selling between groups. Together these are all providing the leading retailers with the opportunity to take consumer-centric innovation to a whole new level. Lastly, as efficiency is such a driver of margins in this sector, internal process innovation is a correspondingly key area of focus. Customers largely see the visible impacts from innovation in terms of new products, services, store layouts and website usability. But as new technologies hit the supply chain it is the companies that can best manage the flow of materials that will win the day. As such an efficient IT infrastructure is
vital and this has been a major area of spend in recent years for the
main players.